The U.S. and China are widely understood to be locked in a trade war. Less appreciated is how their competition now extends across strategic sectors—semiconductors and advanced components, telecommunications, pharmaceuticals and health care, renewable technologies, and more. The rivalry has heightened worries about intellectual-property theft, hidden “back doors” in hardware and software, and Beijing’s leverage over critical tech supply chains.

China’s role as a manufacturing powerhouse makes it central to U.S. commerce, from small plastic toys and apparel to heavy machinery. In 2024, China was the largest origin of U.S. imports of electrical machinery and electronics—about $124 billion—underscoring the depth of economic interdependence even amid mounting strategic distrust.

At the same time, Chinese firms are deeply active inside the United States, establishing subsidiaries and selling real products in real markets. The challenge, U.S. officials argue, is that Chinese companies are obligated under Chinese law to assist the state’s intelligence services, casting a shadow of suspicion over their operations abroad. Over the past decade, Chinese investors have acquired notable American assets—from GE Appliances to the Waldorf Astoria—and firms such as Hytera Communications have established a footprint in U.S. markets. In isolation, none of this would necessarily raise alarms; taken together, it has.

Recent years have brought a striking escalation in espionage concerns. In 2024, U.S. authorities disclosed intrusions into telecommunications networks that, according to ABC News reporting, likely exposed data on more than a million customers. In 2022, officials halted a Chinese-backed plan to build a decorative pagoda at a high point in Washington, D.C., wary that unusual building materials and location could facilitate signals intelligence. And in 2023, the U.S. placed Inspur Group—a major cloud and AI-infrastructure provider—on a federal blacklist over ties to China’s military–industrial sector. These examples, among others, illustrate how commercial presence can intersect with security risk.

Washington has responded by restricting companies with links to China’s military and security services, particularly where the U.S. defense establishment is involved. In December 2023, Congress used the 2024 National Defense Authorization Act to prohibit the Department of Defense, beginning in 2027, from buying batteries from six of China’s largest manufacturers. Lawmakers then followed in March with the Decoupling from Foreign Adversarial Battery Dependence Act, explicitly targeting firms such as BYD, Envision Energy, EVE Energy, Gotion High-Tech, CATL, and Hithium.

Hithium, a Xiamen-based battery maker, opened a manufacturing facility in Mesquite, Texas, in May to produce energy-storage modules and systems. Even so, U.S. officials have flagged the company’s ownership structure. After raising hundreds of millions of dollars, Hithium added prominent financial institutions to its cap table alongside the North Industries Guodiao (Xiamen) Equity Investments Fund Partnership LP, an investment manager for China North Industries Group—better known as Norinco, a giant state-owned defense contractor sanctioned by the U.S. Treasury since 2021 as part of the Chinese Military-Industrial Complex. That connection alone, the Pentagon argues, poses unacceptable risks to national security.

Hithium’s corporate history has also drawn scrutiny. Founder Wu Zuyu—vice chair of the Xiamen Federation of Industry and Commerce and recognized provincially as a leading entrepreneur—has faced allegations in China of major intellectual-property theft, violations of a non-compete agreement, and the poaching of engineers and patented designs from Contemporary Amperex Technology Co. Limited (CATL), the world’s largest battery producer. However, those cases ultimately resolve, they reflect the wider thicket of questions surrounding ownership, governance, and state influence in Chinese industry.

The broader point remains: Companies like Hithium are not outliers but part of a growing set of test cases demonstrating how the U.S.–China trade conflict reverberates far beyond tariffs. What looks like a commercial transaction can quickly become a national-security dilemma, and policies written for the supply chain can end up redrawing the map of strategic competition.